USD/JPY Price Analysis: Strong Buyers Above 134.50, Eying US Data

• The USD/JPY pair could approach and reach the upper median line (UML) and the 23.6% retracement level.
• A new lower low activates a larger correction.
• A valid breakout above the upper median line could activate an upside continuation.

The USD/JPY price dropped in the short term as the Dollar Index was in a corrective phase, while the Japanese Yen Futures rebounded after the last massive drop.

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The bias remains bullish despite temporary retreats, so the current drop could bring new long opportunities. It was trading at 135.00 at the time of writing, and it seems determined to come back higher as the Yen Futures signaled that the rebound ended.

Still, we need strong confirmation before going long or short on the USD/JPY pair. Technically, the currency pair is still in a corrective phase. That’s why we have to wait for fresh opportunities.

The USD tries to rebound even if the US Flash Services PMI and the Flash Manufacturing PMI reported worse than expected data signaling a slowdown in expansion in both sectors. Today, the Japanese SPPI rose by 1.8% versus 1.7% expected, while the National Core CPI registered 2.1% growth matching expectations.

Later, the US Revised UoM Consumer Sentiment could remain steady at 50.2 points, while the New Home Sales indicator could drop from 591K to 590K. The Revised UoM Inflation Expectations will also be released, but I don’t think this indicator will change the sentiment.

USD/JPY price technical analysis: Bullish momentum

As you can see on the 1-hour chart, the USD/JPY pair failed to stabilize below the 134.50 psychological level and below the 38.2% (134.72), signaling that the correction is over. Still, the downside pressure remains high as long as it stays under the descending pitchfork’s upper median line (UML). The rate retested this dynamic resistance confirming it as an upside obstacle. The 23.6% (135.48) retracement level also represents an upside obstacle, so you have to be careful.

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False breakouts or a bearish pattern around these levels could announce a new sell-off.

Still, you should know that a larger correction could be activated only by a new lower low if the rate drops and closes below the 134.99 low. Jumping, closing, and stabilizing above the upper median line (UML) could announce further growth and an upside continuation.

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